On February 25, 2016, the U.S. Department of Labor (“DOL”) published a Notice of Proposed Rulemaking (“NPRM”), which sets forth a proposed set of rules to implement Executive Order 13706, Establishing Paid Sick Leave for Federal Contractors (the “Executive Order”).

The Executive Order was signed by President Barack Obama in September 2015. It requires certain employers that contract with the federal government to provide their employees with paid sick leave each year. The DOL estimates nearly 437,000 workers employed by federal contractors will receive paid sick leave as a result of the Executive Order.

NPRM – The Key Provisions

Covered Contracts

The rules proposed by the NPRM would cover certain new contracts and replacement contracts with the Federal Government that are awarded on or after January 1, 2017. The four major categories of covered contracts would include:

Procurement contracts for construction covered by the Davis-Bacon Act (“DBA”);

Service contracts covered by the McNamara-O’Hara Service Contract Act (“SCA”);

Concessions contracts, including any concessions contracts excluded from the SCA by the DOL’s regulations at 29 CFR 4.133(b); and

Contracts in connection with Federal property or lands and related to offering services for Federal employees, their dependents, or the general public.

Any employee who performs work on or in connection with a covered contract will be entitled to accrue paid sick leave in accordance with the rules set forth in the NPRM.

Accrual of Paid Sick Leave

Employees would accrue not less than one hour of paid sick leave for every 30 hours worked on or in connection with a covered contract. Covered contractors would need to calculate accrual of paid sick leave on a weekly basis. Or, in lieu of calculating accrual weekly, a contractor could provide its employees with at least 56 hours of paid sick leave at the beginning of each accrual year.

Reasons for Paid Sick Leave

Employees would be entitled to use paid sick leave:

For their own physical or mental illness, injury or medical condition;

To obtain diagnosis, care or preventative care from a health care provider;

To care for their child, parent, spouse, domestic partner, or any other individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship;

For domestic violence, sexual assault or stalking, if the time absent from work is for the purposes described in (1) or (2), or to obtain additional counseling, seek relocation, or certain other forms of assistance.

Carryover and Payout

Contractors would be required to allow carryover of accrued, unused paid sick leave. However, contractors would not be required to pay out employees for accrued but unused paid sick leave at the time of job separation.

Notice Obligations

Contractors would need to inform employees in writing of the amount of paid sick leave the employees have accrued but not used:

No less than monthly;

At any time when the employee makes a request to use paid sick leave;

Upon the employee’s request for such information;

Upon a separation from employment; and

Upon reinstatement of paid sick leave under the applicable provision.

Concerns have been raised by contractors over some of the provisions, including allowing use of paid sick leave to care for “any other individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship,” which they believe could lead to abuse of paid sick leave.

Leech Tishman’s Employment Practice Group will continue to monitor the NPRM and will provide additional guidance for compliance as necessary.